Latest news with #Rs9.2
Arab News
10-04-2025
- Business
- Arab News
CEO says PIA's first annual profit in decades to attract ‘favorable valuation' from investors
KARACHI: Pakistan International Airlines expects to attract 'more favorable valuation' from investors after the national carrier posted an annual profit for the first time in more than two decades ahead of a second attempt by the government to sell the airline, CEO Amir Hayat said this week. Islamabad's attempt to privatize PIA last year fell flat when it received only a single offer, well below the asking price of more than $300 million. The cash-strapped government of Prime Minister Shehbaz Sharif is struggling to privatize several loss-making public enterprises, including PIA, as part of conditions under a $7 billion International Monetary Fund's loan program approved last year. This week, PIA reported Rs9.2 billion ($33.1 million) earnings from its operations last year ended December and made a net profit of Rs26.2 billion ($93.3 million) in 2024, a development described by analysts as 'good optics' for the privatization push. 'This landmark operational profit of 26 billion rupees fundamentally strengthens PIA's position in the context of the government's privatization plan,' Hayat told Arab News in a written response to questions. 'It demonstrates the inherent value and turnaround potential of the airline, making it a significantly more attractive proposition for potential investors.' He said the results would positively influence investor confidence and potentially lead to a 'more favorable valuation' during the privatization process. Pakistan had offloaded nearly 80 percent of the airline's legacy debt and shifted it to government books ahead of the privatization attempt. The rest of the debt was also cleaned out of the airline's accounts after the failed sale attempt to make it more attractive to potential buyers, according to the country's privatization ministry. The airline has for years survived on government bailouts as its operational earnings were eaten up by debt servicing costs. Officials say offloading the debt burden and recent reforms like shedding staff, exiting unprofitable routes and other cost-cutting measures led to the profitable year. Hayat said the latest profit was because of 'a comprehensive reforms program' executed over the past few years. 'Key drivers include maintaining strict financial discipline by implementing stringent cost control measures across the board, scrutinizing every expense, creating operational efficiencies in every aspect of flight operations, reducing ground times, and enhancing fuel efficiency,' Hayat said. Other measures included route optimization by curtailing non-productive routes and capitalizing on profitable ones, and revenue enhancement by creating opportunities in neglected segments such as cargo, ancillary sales and codeshares and alliance partnerships. 'We view this profit not as a one-off anomaly, but as the foundational result of deep, structural changes within the airline,' Hayat added. While the aviation industry remained vulnerable to external variables like fuel prices and geopolitical factors, PIA had developed internal mechanisms that provided a 'strong basis for continued positive performance.' 'Our clear intent and strategy are geared toward maintaining profitability moving forward and our budget for 2025 is already planned on net profitability,' the PIA CEO said. Muhammed Sohail, the chief executive officer at Topline Securities, said the latest profits would provide 'good optics to attract more investors' to buy the airline. Ahead of the attempt to sell the airline last year, PIA had faced threats of being shut down, with planes impounded at international airports over its failure to pay bills and flights canceled due to a shortage of funds to pay for fuel or spare parts.
Express Tribune
20-02-2025
- Business
- Express Tribune
Bleeding dry
Listen to article State-owned enterprises (SOEs) in Pakistan continue to be a major liability, draining the national exchequer with mounting losses and debts that have reached staggering levels. According to the Ministry of Finance's latest report, SOEs recorded a collective loss of Rs851 billion in FY24, with total loans ballooning to Rs9.2 trillion - a sum nearly equivalent to the FBR total collections. These numbers are indicative of the dire financial and credit risks that these entities pose to the economy, making the government's failure to reform them an increasingly costly oversight. The National Highway Authority alone reported a colossal loss of Rs295.5 billion, making it the highest loss-making SOE. Despite persistently increasing toll rates, the NHA has done little to address its financial inefficiencies, leaving taxpayers to bear the brunt of its mismanagement. Meanwhile, the power sector remains the biggest collective drain, with inefficiencies and circular debt eroding economic value. The overall Economic Value Added (EVA) of SOEs stands at negative Rs2.5 trillion, signalling that these entities are not just loss-making but actively diminishing national wealth. The incumbent government took office promising macroeconomic stability through structured reforms, including the privatisation of chronically loss-making SOEs. However, despite its commitments - largely dictated by the IMF bailout programme - little has materialised. Attempts to sell PIA yielded little progress, with potential buyers hesitant due to its staggering liabilities and operational inefficiencies. Similarly, other bleeding SOEs remain under state control, continuing to erode public finances. Instead of letting these entities continue to haemorrhage public funds, the government must aggressively pursue buyers, offer incentives and push through privatisation without delay. It is time to move beyond rhetoric and take concrete steps to divest the failing enterprises.
Express Tribune
28-01-2025
- Business
- Express Tribune
MEPCO's Rs119b investment plan receives flak
Listen to article ISLAMABAD: Multan Electric Power Company (Mepco) has incurred a financial loss of Rs41.8 billion due to poor recovery of bills and higher line losses. The shocking disclosure was made during a public hearing on Mepco's proposed five-year investment plan, amounting to Rs119 billion and covering fiscal years 2025-26 to 2029-30. The hearing was held at Nepra headquarters, where the session was chaired by the chairman of the power-sector regulator. The public power utility's Rs119 billion investment plan came in for criticism as the company had failed to achieve its previous fund utilisation target. Mepco outlined plans to finance 83% of proposed projects through internal resources and 13% through debt. At the hearing, the company gave details about its financial performance, free cash flow position and challenges in meeting previous targets. Nepra highlighted that Mepco utilised only 60% of its previous investment programme, falling short of achieving transmission and distribution (T&D) loss reduction targets. Instead of restricting its T&D losses to the prescribed 11.83%, Mepco registered losses of 15.18%, which resulted in a financial hit of Rs22.6 billion. Additionally, its recovery ratio for fiscal year 2024 was reported at 97.2%, causing a loss of Rs19.2 billion. The regulator voiced concern over Mepco's technical challenges, including low-voltage losses at 132-kilovolt grid and 11kV feeders. According to data presented at the hearing, Nepra said eight transmission lines and 12 power transformers in areas such as Arifwala, Sahiwal, DG Khan, Rahim Yar Khan, Vehari and Khanewal were overloaded. Furthermore, 202 feeders were reported as overloaded, with 102 feeders suffering losses in excess of 15%. Nepra expressed its reservations about Mepco's ability to execute the proposed investment plan, given delays in previous projects, such as transmission grid upgrades, which led to a negative cost impact on consumers. As electricity demand had dropped, Nepra questioned the necessity of Rs119 billion investment and directed Mepco chief executive officer to rationalise the plan to prioritise consumer relief. It underscored the need for timely completion of approved projects from prior years, emphasising accountability and efficient resource utilisation to meet consumer expectations. Electricity rates in Pakistan have increased by 268% between November 2010 and December 2023. The average tariff rate has risen from Rs9.2 to Rs24.72 per kilowatt-hour. Keeping that in view, the Lahore Electric Supply Company (Lesco) has filed a petition with the regulator for revision in security deposit rates for consumers desiring to get new electricity connections. It has cited a significant increase in average tariff rates over the past decade. The proposed changes are aimed at better aligning security deposits with current billing trends and protecting from the risk of consumer default. Under the new proposal, security deposit rates for all consumers, excluding urban domestic users, will be set at two and a half months of average billing. For urban domestic consumers with properties up to 10 Marlas, the security deposit requirement will be raised to cover three months of billing. For properties exceeding 10 Marlas, the rates will be pegged at 1% of the land value, based on the Federal Board of Revenue rates. Lesco has also requested modification to existing rules to allow the filing of consolidated petitions for security deposit rate adjustments in tandem with its annual reviews. This approach is expected to streamline the process and ensure timely updates to deposit requirements. The proposed revisions are targeted at addressing the gap by ensuring that security deposits adequately cover potential arrears in case of payment defaults. As part of its policy under Clause 5.1.1 of the Consumer Service Manual 2021, Lesco plans to issue demand notices for security deposits at updated rates, which will be deposited by applicants in the designated bank branches.
